This blog is devoted exclusively to American jobs and America's labor markets

Saturday, May 23, 2015

Salary Sharing Taboos and the Memory of Gordie Howe

The title of the article reads “Salary-sharing taboo a big hurdle for pay equity.” [Washington Post, 5-10-15] No single bit of American pretension, vanity and egotism does more to harm the common cause of labor than pay secrecy. It harms more than pay equity; it lowers wages for all.

The article cites a linkedIn survey of a thousand full-time U.S. workers that found 73 percent aren’t comfortable discussing their pay with anyone at their office. Only 13 percent said they were completely comfortable while 14 percent said they could discuss salary with close colleagues but not their wider team.

Pay differentials create the incentive to replace higher paid labor with lower paid labor. If Harry makes more than Barry, business has the incentive to replace Harry with Larry and pay him like Barry. Some people seem to understand this when they complain that union negotiators sell out their members by agreement to have a two-tier wage system. If Harry knows Barry makes less, it is their mutual self interest to negotiate the higher pay for both.

The article cites women as less comfortable than men when discussing pay. How foolish when women have a long history of pay discrimination. Some managers take their discrimination seriously and do not hire women at any wage, but the more unscrupulous know women are employable and productive and can be hired at low wages to replace Harry, Barry or Larry. If women would discuss pay with their male colleagues they would learn lots about the men around them, or any claims they offer about equality.

In a recent sports book about Hockey Legend Gordie Howe, he discusses some of his contract negotiations with the Detroit Red Wings. Howe admitted he and his teammates were in the dark about team salaries and for other players in the NHL. Their contracts committed them to secrecy and forbid comparing pay with teammates or players on other teams.

During contract negotiations General Manager Jack Adams would always tell Howe he was the highest paid player in the league, which would be appropriate for one the finest players ever to play hockey. Trouble is he wasn’t. It was years later that he learned from a player on another team who was head of the players association that he was not even the highest paid player on his team. With that information he negotiated a raise. There was no sign management was embarrassed by their deception.

If pay secrecy appeals to your vanity, remember Gordie. Pay differentials and pay secrecy hold wages down for everyone; they are one of many enemies of better wages.